Terms and Conditions

Terms and Conditions for NextGen Accounts

The Harold Alfond College Challenge (“HACC”) was established by the Alfond Scholarship Foundation (“ASF”). The Finance Authority of Maine (“FAME”) assists ASF with the administration of the HACC. ASF designates a $500 grant to each eligible recipient (“Alfond Grant”), which is invested at ASF’s discretion. If a NextGen College Investing Plan (“NextGen”) account is opened naming an eligible recipient as the beneficiary of the account, the current value of the Alfond Grant may be linked to the account for reporting purposes, as follows. (See also HACC Guidelines available at http://www.500forbaby.org/guidelines/).

1) Eligibility. The Alfond Grant may be linked to a NextGen account naming the following as the beneficiary of the account:

A. A child born on or after January 1, 2013 who is reported by the Maine Bureau of Vital Records (“BVR”) as a Maine resident birth, and for whom the Alfond Grant has not already been linked to a NextGen account naming the child as the beneficiary of the account; or

B. A child born on or after January 1, 2013, who, if not reported by BVR as a Maine resident birth, can prove Maine residency at birth with documentation acceptable to FAME and ASF at account opening; or

C. A child who was not born a Maine resident, but for whom a NextGen is opened on or before the child’s first birthday, and the child is a Maine resident at the time of account opening.

2) Important Information.

A. Although linked to an account, neither the Alfond Grant nor any earnings thereon is, at any time, the property of the account owner or the beneficiary. ASF owns the grants, including any earnings thereon, until a permitted withdrawal for the qualified higher education expenses of the beneficiary.

B. Alfond Grants are invested by ASF in its sole discretion. Neither the account owner nor the beneficiary may direct the investment of the Alfond Grant.

C. Although initial contributions may be made when opening the NextGen account, no initial contribution is required for an account eligible to have the Alfond Grant linked to it.

D. Only one Alfond Grant is available per account beneficiary. In the event that more than one individual opens an account for the same child, the Alfond Grant will be linked to the first account opened. In the unlikely event that multiple accounts are opened on the same day, FAME, in its sole discretion, will select the account to which to link the Alfond Grant.

E. Account owners should allow up to 120 days for the Alfond Grant to be linked to the account.

F. The Alfond Grant may only be used to pay for qualified higher education expenses of the beneficiary and will only be paid to an eligible institution of higher education. “Qualified higher education expenses” and “eligible institution of higher education” are as defined in the Internal Revenue Code of 1986, as amended. If required by FAME or ASF, the account owner must certify that the grant is being used to pay for qualified higher education expenses of the beneficiary at an eligible institution of higher education.

G. The Alfond Grant should be fully used for qualified higher education expenses before other contributions to the account or any earnings thereon are used.

H. The Alfond Grant, including any earnings thereon, will no longer be linked to the account in the following circumstances:

i. The account owner changes the beneficiary;

ii. The beneficiary dies;

iii. The grant has not been used by the beneficiary’s 28th birthday;

iv. In the event of fraud or misrepresentation by the account owner;

v. The account is closed, including but not limited to rollover to another state’s Section 529 plan.

In certain circumstances, the beneficiary may still be eligible for the Alfond Grant. Contact FAME (at 1-800-228-3734) for more information.

I. An account eligible to be linked to the Alfond Grant is not eligible for the Initial Matching Grant provided by FAME.

J. If Alfond Grant funds are withdrawn from an account and the withdrawal is subsequently determined to have been fraudulent, FAME may off-set the amount fraudulently obtained from any funds remaining in the account.

K. The owner of the account to which an Alfond Grant has been linked may refuse such action by contacting FAME (at 1-800-228-3734). Non-refusal constitutes the account owner’s acceptance of these Terms and Conditions.

3) Default Investment Option. A NextGen Client Direct Series Account Application submitted for an account eligible to be linked to the Alfond Grant, other than an application submitted through an electronic application process, will be accepted without investment option(s) selected. However, any contributions made to the account will be 100% allocated to and invested in the appropriate iShares Age-Based Portfolio, managed by BlackRock, unless and until a different investment allocation for existing and/or future contributions is directed by the account owner. An application submitted through an electronic application process will not be accepted without investment option(s) selected.

4) Tax Consequences. The Alfond Grant has been designed so that the grant, including any earnings, used for certain qualified higher education expenses will be treated as a scholarship as defined by the Internal Revenue Code. The Alfond Grant can be used for tuition, fees, certain room and board expenses, books, supplies and certain equipment. However, any portion of the grant used as payment for room and board costs may be subject to federal and/or state income tax. Similarly, any portion of the grant awards used to pay for qualified higher education expenses at schools not eligible for the Title IV financial aid may not be eligible for federal and/or state tax-exempt treatment. Notwithstanding the design for the grant program, the Internal Revenue Service could take the position that the grants are subject to federal income taxation in the year the grant is awarded or the year in which the funds are withdrawn. Awardees should consult their own tax advisor regarding the tax treatment of grant funds.

NextGen is a Section 529 plan administered by the Finance Authority of Maine (FAME). Before you invest in NextGen, request a NextGen Program Description from your Merrill Lynch Financial Advisor or Maine Distribution Agent or call Merrill Edge at 1-877-463-9843 and read it carefully. The Program Description contains more complete information, including investment objectives, charges, expenses and risks of investing in NextGen, which you should carefully consider before investing. You also should consider whether your or your designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s 529 plan. Merrill Lynch, Pierce, Fenner & Smith Incorporated, a registered broker-dealer, member SIPC, is the program manager and underwriter.

NextGen is available to self-directed investors in the Client Direct Series or through financial advisors in the Client Select Series. Each series offers different investment options, each with its own sales charges, fees and expense structure. Expenses associated with the Client Direct Series will generally be lower than those associated with the Client Select Series. Currently some of the same investment options are available in each series.